Note: This is the sixth and final part of a longer series on how social media is affecting management. You can find the earlier posts – The future of (knowledge) work, Knowledge Workers in the British Raj, The north-south divide, Working in Hollywood and World of Warcraft in the workplace – elsewhere on this blog.
What impact will Social Media have on your business? Is it evolution, revolution, or a non-event? It’s hard to deny that Social Media is changing how we understand the role of government, and how we interact on the social commons. But what is its impact on the private sphere: the gated communities which are our businesses and organizations? Some folk claim that we’ll see a similar shift in the private sphere as we’re seeing in the public one. A revolution in the workplace as the workers realize that they really do control production, downing tools in search of a better deal and conditions.
This point of view ignores two key facts. First, that private spaces are, by their nature, more flexible than public as we are free to define who can inhabit them. Revolution is unlikely. Business owners still need someone to hold accountable for the performance and behavior of their businesses, just as regulators and governments want to ensure that someone in the organisation is on the hook for meeting their demands. Management will continue to manage, and to be held accountable, no matter how empowered the workforce becomes{{1}}. Second, that the technologies we’re deploying don’t just change how we carry out the tasks our businesses needs, as they also change what tasks we need to carry out. There is no reason for tomorrow’s organizations to operate within the same framework that yesterday’s ones did.
[[1]]The future of (knowledge) work @ PEG[[1]]
The nature of work is changing, and the shift in work practices looks like it will be comparable to the shift we saw during the Industrial Revolution – between the 18th and 19th centuries – when almost every aspect of daily life was influenced in some way. Before the Industrial Revolution people worked from their homes, farming or blacksmithing as the need arose, and the concept of work-life balance hadn’t found its way into the dictionary. After the revolution most people worked in vast bureaucracies, leaving home every morning to travel to work (or, early on, living in vast company owned dormitories next to their work) and fit themselves to into the tasks demanded of them.
The Industrial Revolution gave us Taylorism, a view of business which equates the organization to a vast programmable machine. Businesses were inward looking, intent on improving their internal operations. Optimizing business was the challenge of defining the perfect sequence of tasks, each carefully sculpted to deliver maximum value at minimum cost, and then selecting and shaping employees to fit the tasks.
The environment business operates in today has changed dramatically since Frederick Taylor created scientific management. The world used to be fairly stable; you wore the same clothing styles (more or less) as your parents before you, as would your children following after. Today, however, the environment changes significantly every year, if not every month or week. Nowhere is this more evident than with the creation of fast fashion, with Zara flipping the company’s supply chain on it head to optimise time from runway to shelf rather than cost, swapping the seasonal fashion collection for a constant stream of new products and driving new customer behaviours in the process.
The stability business used to rely on has given way to a more uncertain environment; the predictable progression of the business seasons in a temperate climate exchanged for the unexpected and often unpredictable storms and hurricanes of a more tropical clime{{2}}. Our success used to rely on the quality of our toolkits – the business processes and assets at the heart of our business – as it is these toolkits that enabled us to survive the steady progression of the seasons. Today our success relies on our skill – our ability to leverage the on-demand services and capabilities we find around us – as it is our ability to adapt these tools we find around us to the unexpected threat or opportunity, that now determines our success.
[[2]]The North-South divide @ PEG[[2]]
The old, highly specialized and highly entailed experts we used to rely on are rapidly becoming a liability, and we’re incrementally replacing specialized skills with solutions, frameworks and on-demand services. From IBM’s first election toting machines built with repurposed punchcard readers from knitting mills, through early departmental computers (such a L.E.O., the Lyon’s Electronic Office) to the birth of enterprise IT (and client-server along with it) and more recent web technologies, the history of technology in business has been a story of slowly reifying layers of expertise in tools, enabling this expertise to be distributed and leveraged. Social Media is just the latest step in this evolution, the key difference being that it automates and streamlines the communication and collaboration between individuals, rather than tasks that these individuals work on.
Our companies are being hollowed out, their middle layers of management replaced by software and solutions. Rather than empowering middle management, Enterprise 2.0 and Social Business Design is eliminating them. Social Media is empowering the team at the front line and the executive to connect directly with each other, bypassing the many layers of middle management most organizations contain. They’re externally focused – the front line intent on tending our customers and delivering product, the executive focused on understanding the waves in the market and charting the business’s path forward – where middle management was internally focused, concerned with keeping the bureaucracy functioning, a bureaucracy that many organizations are in the process of dismantling. Similar to the rural Indian civil service in the British Raj{{3}}, we’re moving to flat, or even super-flat, organizational structures which swap the command-and-control of the past for clear objectives and the devolution of responsibility for decisions to the front line.
[[3]]Knowledge workers in the British Raj @ PEG[[3]]
Tomorrow’s business, after it has adopted Social Media, will not just be a new command-and control paradigm (bottom-up rather than top-down, distributed rather than centralized) retrofitted to our existing bureaucracies. Tomorrow’s business will be something different, smaller and much leaner, built from dynamically forming coalitions focused on achieving a common goal. The highly skilled specialists concerned with building the complex toolkits will become a thing of the past.
The transformation from large bureaucratic organizations to more fluid coalitions will result in a similar shift in work practices as we saw during the Industrial Revolution. We can already this the beginnings of this with companies starting to understand that their knowledge workers prefer to supply their own tools (such as mobile phones and laptops), as well as the current trend for organisations to restructure their contracts with suppliers, focusing on the outcome they want delivered rather than quality and cost. Smaller workforces holding more general skills will integrate themselves with a community of partners, suppliers and high value free agents, with the company functioning in a similar way to the studios in modern Hollywood{{4}}. The company sets the agenda by determining what problems it wants to focus on, while providing its staff and the broader community swirling around them with a platform to dynamically form teams around specific challenges and goals, World of Warcraft style{{5}}. Rather than defining the perfect task and then fitting the employee to the task, we need to define our goal and then assemble the perfect team to achieve that goal.
[[4]]Working in Hollywood @ PEG[[4]]
[[5]]World of Warcraft in the workplace @ PEG[[5]]
The most significant shift for our businesses is the transition from being knowledge using organizations, to knowledge creating organizations. While the world might be flat (as Thomas Friedman showed us{{6}}), with globalization and the Internet providing on-demand access to low cost products and services from around the globe, the world is also spikey (as Richard Florida claims{{7}}) as the need for localized and personalised services drive demand for unique and creative solutions which fit into a local context. The winners in this race will be the businesses that can marry the two.
[[6]]Thomas L. Friedman (2005), The World if Flat, Farrar, Straus & Giroux [[6]]
[[7]]Richard Florida (2005), The World is Spikey, The Atlantic [PDF][[7]]
Which brings us back to the impact of social media on your organization. It’s not a revolution that will remove the need for the C-level; someone still needs to sign the books and be held accountable to shareholders. Social media might tip the balance a little toward a more collective form of management, but it will not rewrite the rules overnight. Nor is it little more than better and more efficient groupware. Creating a social business is not simply rearranging the people (and power dynamics) or your existing business; it demands smaller, more dynamic teams with more potent and focused team members who might not be on your payroll full time.
What Social Media is doing is driving organizations to complete the shift started in the last few decades, moving from manufacturing centric enterprises to knowledge creating organisations.
The basic economic resource – ”the means of production,” to use the economist’s term – is no longer capital, nor natural resources (the economist’s “land”), nor “labor.” It is and will be knowledge. The central wealth-creating activities will be neither the allocation of capital to productive uses, nor “labor” – the two poles of nineteenth- and twentieth-century economic theory, whether classical, Marxist, Keynesian, or neo-classical. Value is now created by “productivity” and “innovation,” both applications of knowledge to work.
— Peter Drucker, The Post-Capitalist Society{{8}}
[[8]]Peter Drucker (1993), The Post-Capitalist Society, HarperCollins[[8]]
Historically companies have provided a locus to gather the capital, resources and skills required to provide the scale needed to manufacture products cheaply and efficiently. Today problems, the problems of our clients and customers, are increasingly becoming the focus of our organizations, as capital, resources and skills are commoditized, caught between globalization and the Internet. The strongest determinant of success in business today is the ability to solve problems that other people (and organizations) care about. Companies are transitioning from an internal focus to an external focus, intent on gathering the skilled craftsmen required to deliver the projects needed to solve the problems that the company concerns itself with. Companies are becoming the focal point for a network for skilled craftsmen and service providers who are required to solve the problems that the organisation is interested in.
Business is increasingly becoming a question of forming the right team, at the right time, in the right place, with the right tools to provide the best possible outcome. We’re also trying to achieve this in an environment where it is no longer feasible to own all the resources and people we need. Consequentially, success now depends on our ability to mobilize the resources and skills we need from across a broader network that includes not only our (few) employees, but our contractors, partners and even customers. Social media and social business are the tools that allow us to tweak our operating models to do this.
So the impact of social media on our businesses is to strip them back to their cores and (re)focus their energies on what really matters in a rapidly changing and unpredictable environment: problems and the people who solve them.